The question I get most often from newer investors — and almost every out-of-state buyer — isn’t “is this a good deal.” It’s “what is the money going to cost me?” A flip lives or dies on capital. You can buy a house right, scope the rehab right, and still watch the profit evaporate because you didn’t price the debt and the carry honestly before you committed. Most of the flips I’ve seen go sideways didn’t blow up on the rehab number. They bled out slowly through points, interest, and holding costs nobody modeled going in.
I run the sales side at Diamond, and I work with flippers every week — a lot of them financing their first Texas deal, a lot of them underwriting from California or Florida without ever setting foot in Dallas. This post is a line-by-line teardown of what capital actually costs on a Texas fix-and-flip in 2026: the hard-money loan (rate, points, leverage, and how draws really work), the holding costs that run every month you own the house, the true all-in cost of capital as a percentage of the deal, and the DSCR refinance exit if you’re running a BRRRR instead of a straight flip.
Two things up front. First, real estate is a your-money-your-life topic, and I’m not a lender, a CPA, or a licensed broker — this is operator-side education, not financial, tax, or lending advice. Confirm every number against an actual lender’s rate sheet and a Texas CPA before you sign anything. Second, I’m going to use educational ARV buy-math and illustrative deal figures. I am not going to publish what Diamond paid any seller or what our spread was on a deal — that’s not mine to share and it isn’t what helps you. The numbers that decide your flip are your acquisition cost, your rehab, and your cost of capital. Those are the ones I’ll work.
The short version: as of 2026 a Texas fix-and-flip is financed mostly with hard money at roughly 9%–12% plus 1.5–3 points, advanced at the lower of about 90% loan-to-cost and 70%–75% of after-repair value. The debt alone costs about 6%–8% of total project cost on a six-month hold, and the all-in carry climbs to roughly 9%–10% once Dallas–Fort Worth property taxes and vacant-property insurance are added. A BRRRR exit swaps the hard money for a DSCR refinance around 6.125%–7.5%, capped near 75% LTV on a cash-out. Here’s how each piece prices.
The four layers of capital on a Texas flip
Financing a flip isn’t one loan. It’s a stack, and each layer prices differently:
- The acquisition + rehab debt — almost always a hard-money (bridge) loan for a straight flip, because it closes fast and funds rehab.
- The holding costs — the clock that runs every month you own the house: interest carry, property tax, insurance, utilities.
- The exit financing — if you’re keeping the house as a rental (BRRRR), a DSCR refinance replaces the hard money on the back end.
- Conventional financing — the cheapest debt, but the slowest and most restrictive, used mainly for long-term buy-and-hold rather than active flips.
A straight flipper touches layers 1 and 2 and sells. A BRRRR investor touches all four. Let’s price each one as of 2026, then run a full teardown.
Layer 1: The hard-money loan
As of mid-2026, a Texas hard-money fix-and-flip loan typically carries an interest rate of roughly 9%–12% for a standard residential deal — with the broader market spanning 8%–15% depending on borrower experience, credit, and the property — plus 1–4 origination points, of which 1.5–3 points is the industry standard. Those ranges come from lender rate sheets aggregated by sources like Stormfield Capital and Crestmont Capital; they’re indicative bands, not a single index, and they move with your file. A first-time flipper with a thin track record prices at the top of every range. A repeat borrower with a dozen closed deals prices at the bottom.
Hard money exists for one reason: speed. It’s asset-based (the lender underwrites the deal more than they underwrite you), it closes in days instead of weeks, and it funds renovation — which conventional mortgages will not do. You pay for that speed in rate and points. The trade is almost always worth it on a flip, because the whole model depends on closing fast on an off-market house and getting the rehab funded, and because you only hold the expensive debt for months, not years.
LTC vs. LTARV — the lower of the two governs
Here’s the mechanic that trips up more first-time flippers than any other. A hard-money lender applies two leverage caps and lends the lower of the two.
- Loan-to-cost (LTC) — the share of your total project cost (purchase + rehab) the lender will fund. In 2026 that runs up to ~90% for experienced borrowers, ~85% for beginners.
- Loan-to-after-repair-value (LTARV) — the share of the finished home’s value the lender will lend against, most commonly capped at ~70%–75% of ARV (70% is the conservative benchmark most lenders quote).
You qualify at 90% LTC on paper and then the 70% ARV ceiling quietly pulls your actual advance down — and the gap is your cash to close. This is a lending term, and it is a completely different number from the buy-side offer math investors use to price a deal. When I talk about pricing a purchase, the working range is roughly ARV × 75–80% minus repairs (the old “70% rule” has compressed in competitive DFW). The lender’s 70% of ARV cap on what they’ll advance is a separate concept — don’t conflate the two. One decides what you should pay; the other decides how much of it the lender will finance.
How rehab draws actually work
On a hard-money fix-and-flip loan, the rehab budget is not wired to you at closing. It sits in a holdback (escrow) and is reimbursed in stages after you complete each phase of work. A typical project is broken into 3–8 draws — say demo and rough plumbing, then HVAC and electrical, then drywall, then finishes. You pay for the work first, request a draw, the lender sends a third-party inspector (usually 1–3 business days), and funds release — often 3–5 business days after approval, per draw-process write-ups from lenders like OfferMarket.
Two consequences matter for your math:
- Interest accrues only on funds you’ve actually drawn. An undrawn rehab holdback costs you nothing in interest until you pull it. So your monthly carry starts low (just the purchase advance) and climbs as draws fund.
- You need working capital. Because you pay contractors before reimbursement, you carry each phase out of pocket for a week or two. Underfund that and your rehab stalls waiting on a draw — which extends your hold, which runs the interest and tax clock longer. New flippers underestimate this constantly.
Layer 2: The holding costs
The second layer is the clock. Every month you own the house — whether or not a single contractor shows up — you’re paying to hold it. In Dallas–Fort Worth, three lines dominate.
Property taxes. Texas has no state income tax and leans hard on property tax instead. In Dallas–Fort Worth, the combined nominal tax rate — city + county + school district + any special districts — commonly runs roughly 2.0%–2.6% of a property’s assessed (taxable) value, depending on the city and school district. The effective rate actually paid on market value runs lower — around 1.6%–1.7% in Dallas County, per Census figures compiled by aggregators like TaxByCounty — because homestead caps and assessment lag hold owner-occupants’ realized bills down. Here’s the catch on a flip: an investor-owned property under renovation gets neither the homestead exemption nor the 10% appraisal cap, so your realized burden sits closer to the full nominal rate, not the softer effective one. You prorate it to the months you hold (a 6-month flip carries about half a year), so budget the 2.0%–2.6% band on assessed value.
Insurance. This is the line new flippers understate most. A standard Dallas homeowners policy on a ~$300k dwelling runs about $4,000 per year as of 2026 — more for an older roof or a lower deductible — per Insurify — but that’s for an owner-occupied home. A vacant house under renovation needs a vacant-dwelling or builder’s-risk policy, which typically costs more than a standard homeowners policy because a vacant construction site is a higher-risk insurable event. Don’t budget the standard-homeowner number for a flip; it will understate you.
Utilities and other carry. Electric for tools and to run the HVAC test, water for the trades, sometimes gas — a minor monthly line, but a real one, and it runs the entire hold. I treat it as a modest recurring cost rather than a precise statistic, because there’s no clean 2026 benchmark for DFW flip utilities specifically.
A line-by-line teardown of a representative DFW flip
Let me put it all together on one deal. These figures are illustrative — round numbers chosen to show the shape of the financing, not a specific Diamond deal and not a promise of returns. Picture a DFW single-family house an investor buys off-market through Diamond, renovates, and resells in about six months.
| Line | Figure |
|---|---|
| ARV (after-repair value, closed comps) | $360,000 |
| Purchase price (investor’s acquisition via Diamond) | $225,000 |
| Rehab budget | $50,000 |
| Total project cost | $275,000 |
Now the hard-money loan. The lender offers up to 90% of purchase plus the rehab in a holdback, capped at 70% of ARV:
- 90% LTC on $275,000 project cost = $247,500
- 70% LTARV on $360,000 = $252,000
- The lender lends the lower, so the loan tops out near $247,500 — of which roughly $202,500 funds the purchase and about $45,000 sits in the rehab holdback.
| Financing (hard money, ~10.5% / 2 points, 6-month hold) | Amount |
|---|---|
| Loan amount (LTC-capped) | ~$247,500 |
| Cash down on purchase (purchase − advance) | ~$22,500 |
| Origination — 2 points on the loan | ~$4,950 |
| Lender / closing fees | ~$2,500 |
| Interest carry, 6 mo, on drawn funds only | ~$11,500 |
| Cost of the debt (points + fees + interest) | ~$18,950 |
| Holding costs (6-month hold, prorated) | Amount |
|---|---|
| Property tax (~2.3% nominal on assessed value, 6-mo proration) | ~$3,300 |
| Vacant / builder’s-risk insurance (6-mo term) | ~$2,500 |
| Utilities during the hold | ~$1,200 |
| Holding subtotal | ~$7,000 |
Add it up. The cost of capital — what the debt itself costs in points, fees, and interest — is about $18,950, or roughly 6.9% of the $275,000 project cost. Fold in the holding costs (tax, insurance, utilities) and the all-in carry climbs to about $25,950, or roughly 9.4% of project cost — and that’s before the resale commission and seller closing costs that come off the back end when you sell.
Notice what’s not in that table: I’m not computing the investor’s profit, and I’m not showing what Diamond paid to acquire the house. The spread between the $225,000 acquisition and the $360,000 ARV is not profit — the $50,000 rehab, the ~$26,000 of capital-and-carry above, and the sale costs all come out of it first. What’s left is the investor’s to calculate, because their rehab number and their cost of capital aren’t mine. That’s the honest version of pricing a flip.
Layer 3: The BRRRR exit — the DSCR refinance
If your plan is BRRRR — buy, rehab, rent, refinance, repeat — you don’t sell at the end. You place a tenant and refinance the hard money into long-term debt, ideally pulling most of your capital back out to redeploy. That refinance is almost always a DSCR loan.
As of July 2026, DSCR loan rates for a rental refinance on a 1–4 unit property held in an LLC price around 6.125%–7.5% for strong files, with cash-out refinances and weaker-credit files pricing higher, into the high 7s and 8s, per aggregators including DSCR Authority. DSCR loans qualify on the property’s rent rather than your personal income, which is what makes them the natural BRRRR exit. The two numbers that govern the loan:
- DSCR ratio — net rent divided by the debt payment. Most lenders want at least 1.0 (rent covers the mortgage), prefer 1.20–1.25+ for the best pricing, and the observed median closed loan runs near 1.16.
- LTV — generally capped around 75% on a cash-out refinance, rising toward 80% for 740+ credit with strong coverage.
That 75% cash-out ceiling is the single biggest BRRRR risk after the appraisal itself. If your all-in basis is too high relative to the refinance appraisal, 75% LTV won’t return all of your capital, and you leave money trapped in the deal. Model the refinance before you buy, not after — the fix-and-flip vs. buy-and-hold guide walks through the hold-side math (cap rate, NOI, DSCR) in detail, so I won’t re-run the strategy here; this post is about what the capital costs.
Layer 4: Conventional buy-and-hold financing
The cheapest debt in the stack — and the slowest — is a conventional investment-property mortgage. As of mid-2026, conventional investor 30-year fixed rates run roughly 7.1%–7.6% (broadly to ~8.5% by credit and LTV). That’s a premium of about +0.50%–1.00% over an owner-occupied rate, and it typically requires 15% down on a 1-unit up to 25% down on a 2–4 unit, per The Mortgage Reports; Experian notes lenders generally want at least 15%–20% down on an investment property, sometimes more.
For context, the authoritative owner-occupied benchmark — the Freddie Mac PMMS 30-year fixed — sat at 6.43% (Jul 2), 6.49% (Jul 9), and 6.55% (Jul 16) in July 2026, with the 15-year at 5.93% on July 16. That PMMS figure is the one truly primary index in this whole post, and it’s worth anchoring to — but do not mistake it for an investor or hard-money rate. It’s owner-occupied and conforming; every kind of investor financing prices meaningfully above it. Conventional financing generally won’t fund a renovation and won’t close in a week, which is why it’s a buy-and-hold tool, not a flip tool.
How to stack it: which loan for which exit
Here’s the whole stack in one view, with 2026 ranges. Treat every figure as an indicative band from lender rate sheets, not a quote.
| Loan type | Typical rate (2026) | Points | Leverage | Best for |
|---|---|---|---|---|
| Hard money (bridge) | ~9%–12% (8%–15% range) | 1–4 (1.5–3 std) | ≤90% LTC and ≤70–75% ARV, lower governs | Fast flip close + rehab funding |
| DSCR refinance | ~6.125%–7.5% strong; 7s–9s cash-out/weak | ~0–2 | ~75% LTV cash-out (~80% for 740+) | BRRRR refi exit; qualifies on rent |
| Conventional investor | ~7.1%–7.6% (to ~8.5%) | Varies | 15% down (1-unit) to 25% (2–4 unit) | Long-term buy-and-hold; no rehab |
| Freddie Mac PMMS (reference only) | 6.43%–6.55% (Jul 2026) | — | Owner-occupied conforming | Benchmark, not an investor rate |
The straight-flip playbook is layers 1 and 2: hard money in, renovate on draws, hold six months, sell, retire the loan. The BRRRR playbook adds layer 3: hard money in, renovate, rent, then refinance into a DSCR loan and keep the house. The long-term landlord who doesn’t need a renovation skips hard money entirely and buys with conventional debt. Your exit picks your stack, and — this is the part newer investors miss — you should know your exit and its financing before you close on the buy, because the close date and the cost of capital you commit to have to be ones your chosen loan can actually hit.
Where Diamond fits — and where it doesn’t
Let me be precise about this, because it matters. Diamond Acquisitions (DACQ INC), a Texas cash home buyer, is the SELLER of the deal — not your lender. We are not a licensed brokerage, we do not list houses, and we do not originate loans. You bring your own capital or financing.
What the investor portal provides for free is the thing that saves first-time and out-of-state flippers the most time: a roster of vetted lenders — hard-money lenders for fast flip closings, DSCR lenders for rental and BRRRR refinance exits, and conventional lenders for long-term holds — so you don’t have to cold-source financing on a house you’re trying to close in two weeks. It also carries vetted contractors to validate the rehab number that drives your entire LTC/LTARV calculation, and every deal page has flip, rental, and rehab calculators pre-populated with that specific property’s figures, so you can pressure-test the cost of capital against a real deal in a few minutes. For the full mechanics — access, the deal pages, in-portal offers, and the single-closing assignment through a Texas title company — read how buying from Diamond works. If you’re underwriting from outside Texas, the out-of-state investing playbook covers verifying and closing a house you can’t walk.
Most of our flip buyers close with hard money in one to four weeks, then refinance or resell on the back end. We can’t make the capital free — nobody can — but knowing what it costs before you offer is the difference between a flip that pencils and one that doesn’t.
The bottom line
The cost of capital is not a footnote on a flip — in 2026 it’s roughly 6%–8% of your project cost in points and interest for a typical six-month hard-money hold, and closer to 9%–10% all-in once DFW property taxes and vacant-property insurance run alongside it. Price it honestly, before you buy, using real 2026 ranges: hard money at ~9%–12% plus 1.5–3 points with the lower of ~90% LTC and ~70–75% ARV governing your advance; a DSCR refi at ~6.125%–7.5% for a BRRRR exit capped near 75% LTV; conventional at ~7.1%–7.6% for a long hold. The flips that work are the ones where the investor modeled the money as carefully as the rehab.
If you want to run those numbers against real inventory, browse Diamond’s off-market deal flow — the calculators, the vetted contractors, and the vetted lender roster for either exit are all in one place. Diamond is the seller of the deal and the source of the lender roster; the capital, and the decision, are yours. And confirm the tax and financing specifics with a Texas CPA and an actual lender before you close, because that part is genuinely personal.